Arkane Lyon’s fate

In a high-stakes turning point for Xbox, 5 major studios are being spun off. One, 600 jobs gone instantly, another one, 600 layoffs looming, but one team's future hangs in the balance.

Arkane Lyon, the studio behind Dishonored and *Marvel's Blade. Double Fine and Compulsion are regaining independence with Microsoft funding, while Ninja Theory and Undead Labs have been sold to unnamed buyers, but French labor laws are forcing Xbox to negotiate Arkane's fate directly with its 206 employees.

The report suggests this restructuring is the latest failure from an overambitious acquisition spree dating back to the 2010s, and while no studios have been shut down yet, Marvel's Blade, running late and over budget, may be the final straw for Arkane Lyon. Analysts argue Microsoft's CEO is refocusing on "core business" like Fallout and Minecraft, leaving "independent creators" like Arkane's French team, who made headlines in 2025 by speaking out against the company's ties to the Israeli military, vulnerable to the chopping block.

With 5 million players for Deathloop by early 2023, Arkane Lyon's track record is strong, but the report notes investors are pouring money into AI instead, leaving even its co-founder, Raphael Colantonio, joking he'd buy the studio back— if he could afford it. Now the work council representing Arkane's staff has days or months to secure a sale, a management buyout, or face shutdown, as Xbox's bold move risks losing one of gaming's most critically acclaimed studios and 206 jobs with it.